At the end of July 2026, the financial world focused on the latest US Federal Open Market Committee (FOMC) meeting, which decided to keep the policy interest rate at 3.50–3.75%. Although this was in line with market expectations, some committee members chose to vote for a rate increase, causing the market to rethink investment strategies.
The Fed chose to maintain the interest rate at the existing level to support the US economic recovery amid uncertainties stemming from events in the Middle East. Currently, the economy is expected to continue strong growth, with employment expanding according to the labor market and only slight changes in the unemployment rate.
Under the leadership of Fed Chair Kevin Warsh, who has consistently stated there will be no forward guidance on policy rates, market uncertainty has increased. Attention must be paid to inflation risks, oil prices, and the situation in the Middle East.
Chayanon Rakkanchanat, CEO of Finnomena Funds and Co-Founder of Finnomena, said that although the Fed meeting results were as expected, the three dissenting votes caused market concerns, leading to a significant drop in the Dow Jones index, which closed near its 50-day moving average. The Nasdaq 100 saw strong selling pressure in the chip sector. Overall, all four major US stock indexes—Nasdaq, S&P 500, Dow Jones, and Russell 2000—experienced declines.
A key point to watch is the US 30-year bond yield, which rose by 12 basis points in a single day, increasing by 2.36% to reach 5.2%, the highest level in 19 years since June 2007, before the subprime crisis. Meanwhile, the 10-year bond yield rose 8 basis points to 4.68%, while the 2-year yield remained unchanged. This situation may reflect growing market concerns about inflation and the future US economy, warranting close monitoring.
In this meeting, three of the 12 members voted against the majority, favoring a 0.25% rate hike. Investors believe some members weigh heavily on the unrest in the Middle East, which has driven oil prices higher. If the situation worsens, more members might shift to support rate increases.
Based on various indicators, the market still expects the Fed to raise rates in the future, though opinions differ. Some anticipate hikes during the September 2026 and 17 March 2027 meetings, or even multiple increases. Banks like Bank of America, J.P. Morgan, and Deutsche Bank expect at least one hike in 2026, while others such as Goldman Sachs, Morgan Stanley, and TD Bank foresee possible rate cuts.
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